This measure of the money supply differs from M2 in that it includes treasury deposits at the Fed (and excludes short-time deposits, traveler’s checks, and retail money funds).

M2 growth rose slightly in August 2018, rising 4.1 percent, compared to July’s rate of 3.9 percent. M2 grew 5.3 percent in August of last year. Like Like the TMS measure, the M2 growth rate has fallen considerably since late 2016, but has varied little in recent months.

Money supply growth can often be a helpful measure of economic activity. During periods of economic boom, money supply tends to grow quickly as banks make more loans. Recessions, on the other hand, tend to be preceded by periods of falling money-supply growth.

Many factors contribute to these trends. In recent months, money supply growth — in both M2 and TMS — has likely been impacted by falling growth rates in real estate loans at commercial banks. In August, real estate loans grew 3.3 percent, year over year, which was a 44-month low. The demand for mortgage loans has softened as mortgage rates have risen. In August, the 30-year, fixed average mortgage rate reached 3.55 percent, which was near a seven-year high:

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